Whether digital currencies will become the norm as the world moves towards a cashless society is a complex question that depends on a variety of factors and considerations. Digital currencies, also known as cryptocurrencies, offer several advantages over traditional fiat currencies, but there are also challenges and limitations that need to be overcome. Here's a closer look at the potential of digital currencies in a cashless society:

1. Factors Favoring Digital Currencies

a) Convenience and Efficiency: Digital currencies enable fast, secure, and borderless transactions, eliminating the need for physical cash and the associated logistics.

b) Reduced Transaction Costs: Cryptocurrencies often have lower transaction fees compared to traditional payment systems, making them cost-effective for both individuals and businesses.

c) Enhanced Security: Digital currencies use cryptographic techniques to ensure secure transactions, reducing the risk of fraud, counterfeiting, and other financial crimes.

d) Accessibility and Financial Inclusion: Digital currencies have the potential to provide financial services to unbanked and underbanked populations, promoting greater financial inclusion.

e) Decentralization: Cryptocurrencies operate on decentralized networks, reducing the dependency on central authorities and providing users with more control over their finances.

2. Challenges and Limitations

a) Volatility: The value of cryptocurrencies is highly volatile, making them speculative investments rather than stable mediums of exchange.

b) Scalability: Most digital currencies currently have limited transaction processing capacities, which can hinder their widespread adoption.

c) Regulatory Framework: The regulatory environment for digital currencies varies across jurisdictions, creating uncertainty and potential legal challenges for businesses and users.

d) Infrastructure Requirements: Widespread adoption of digital currencies would require significant investments in infrastructure, such as secure digital wallets and robust internet access.

e) Acceptance and Trust: Gaining widespread public acceptance and trust in digital currencies as a reliable and secure form of payment remains a challenge.

While digital currencies have the potential to play a significant role in shaping the future of finance and payments, several challenges need to be addressed before they can become the norm in a cashless society. It's important to note that the transition towards a cashless society involves various dimensions, including technological advancements, regulatory frameworks, and behavioral changes, and the adoption of digital currencies will depend on the combined effect of these factors.